Tesla’s board of directors approved a new compensation plan on Monday (August 4th) for CEO Elon Musk, granting him 96 million shares of stock valued at around $29 billion.
As Tesla shifts from its core automotive business in turmoil to a focus on robotaxis and humanoid robots, this compensation plan aims to incentivize Musk to continue leading the company.
According to a securities filing, Tesla stated that the temporary stock grant conditions require Musk to continue in a key role at the company for two years.
Tesla noted that Musk must pay $23.34 per share to the company in order to receive these restricted stocks, stating that this price is the same as the per-share exercise price in the company’s 2018 compensation plan.
The company plans to vote on a long-term CEO compensation plan at the annual investor meeting on November 6th.
Tesla stated that granting 96 million new shares is the first step, a “good faith” payment, aimed at fulfilling Musk’s 2018 compensation plan that was valued at over $50 billion, a plan that was rejected by a Delaware court last year.
The Delaware ruling pointed out flaws in Tesla’s board approval process and deemed it unfair to investors. Musk appealed the ruling in March, claiming that the lower court judge had made several legal errors in overturning the record compensation.
This globally valuable car manufacturer is at a turning point. With declining sales in its core automotive business and sharp drops in stock prices, Musk, the largest shareholder holding 13% of the company, leans towards positioning Tesla as an artificial intelligence and robotics company.
Tesla established a special committee earlier this year dedicated to reviewing Musk’s compensation. The committee stated that the stock rewards aim to gradually increase Musk’s voting rights. Musk and shareholders have consistently argued that voting rights are crucial in allowing him to focus on Tesla’s mission.
In the documents submitted on Monday, the committee stated, “While we recognize that Elon’s business interests, hobbies, and other potential needs require substantial and broad time and attention from him… we believe this award will incentivize Elon to stay at Tesla.”
(This article is based on reporting from Reuters)